Does ignoring multidestination trips in the travel cost method cause a systematic bias?

The present paper demonstrates that treating multidestination trips (MDT) as single-destination trips does not involve any systematic upward or downward bias in consumer surplus (CS) estimates because the direct negative effect of a price increase (treating MDT as a single-destination trip) is offset by a shift in the estimated demand curve. Still, ignoring MDT can greatly underestimate or overestimate the CS. In addition, we demonstrate that there is a sound theoretical basis for using preference information for allocating travel costs between different sites included in the MDT package. A novel extreme value approach is proposed, which does not require any overly restrictive assumptions about consumer preferences. This approach is applied to the zonal travel cost model of the Bellenden Ker National Park, Australia. Parametric and non-parametric estimation techniques are used for calculating CS estimates, and the effects of different MDT treatments and estimation methods are compared.     

Who Captures Value in Global Supply Chains? Case Nokia N95 Smartphone

Available statistics reveal little about the economic consequences of the increasing global dispersion of production processes. To investigate the issue, we perform grass-roots investigative work to uncover the geography of the value added for a Nokia N95 smartphone circa 2007. The phone was assembled in Finland and China. When the device was assembled and sold in Europe, the value-added share of Europe (EU-27) rose to 68%. Even when it was assembled in China and sold in the United States, Europe captured as much as 51% of the value added, despite of the fact that it played little role in supplying the physical components. Our analysis illustrates that international trade statistics can be misleading; the capture of value added is largely detached from the flow of physical goods. Instead, services and other intangible aspects of the supply chain dominate. While final assembly—commanding 2% of the value added in our case—has increasingly moved offshore, the developed countries continue to capture most of the value added generated by global supply chains.     

What Determines Collection Rates of Debt Collection Agencies?

We contribute to the literature on debt collection agencies in two ways: First, we present an estimation of the collection rates. The distribution of collection rates exhibits a mean of about 65% and a strong bimodality with peaks at the very ends of the distribution. Second, we investigate potential determinants of the collection success. We find that collection rates are positively related to the exposure at default and to prior debtor‐specific collection rates. In contrast, the age of the account and—if applicable—prior experience with the debtor have a negative impact on collection rates.     

MIDDLEMEN AND THE ADVERSE SELECTION PROBLEM

We demonstrate that the coexistence of an uncoordinated search market and a middleman market may alleviate adverse selection in the trade of goods of different quality. Inability to conduct trade penalizes sellers of low‐quality goods disproportionately, encouraging them to trade via middlemen. A semi‐separating equilibrium exists when a sufficient number of sellers of low‐quality goods choose the middleman market to allow high‐quality goods to be successfully traded in the search market. The result may explain why a search market can survive alongside a coordinated market, a phenomenon characteristic, for example, of markets for used cars, housing and labour.     

The New Keynesian Phillips curve and the role of expectations: Evidence from the CESifo World Economic Survey

We provide evidence on the fit of the hybrid New Keynesian Phillips curve for selected Euro zone countries, the US and the UK. Instead of imposing rational expectations and estimating the Phillips curve by the Generalized Method of Moments, we use direct measures of inflation expectations from the CESifo World Economic Survey. Our main findings are as follows: (i) The use of survey data gives empirical results, which are more reliable than those obtained from the GMM approach. (ii) The purely forward-looking Phillips curve can be rejected in favor of the hybrid New Keynesian Phillips curve. (iii) The estimated coefficients on past inflation are higher when using survey expectations than when using the rational expectations GMM approach. (iv) It remains unclear whether real unit labor costs or a measure of the output gap should be used as a proxy for real marginal costs. (v) Theory-based restrictions lead to an improvement of the empirical results.     

The value of conserving genetic resources for R&D: A survey

The value of genetic resources for R&D is placed within the framework of discussions concerning sustainability. We assess the extent to which society is able to invest now in order to prepare for future risks and uncertainties in the arrival of biological problems. Each of the approaches to valuation is discussed within this setting. Weitzman's approach to measurement is seen to be one that considers society's current objectives and information to be little relevant to future risks and uncertainties. Sedjo, Simpson and Reids' search-theoretic perspective is seen to reduce future uncertainties to highly tractable and known problems. Goeschl and Swanson's bio-technological approach also constrains the problem to be one without any real uncertainty, and focuses on the need to maintain genetic resources in order to maintain control over the problem. Kassar and Lasserre place uncertainty at the core of the problem, and assess the extent to which additional value is added by this feature. In sum all of the approaches to the problem evince a pessimism regarding the capacity of future technological change automatically to resolve these problems. Given this, the value of genetic resources depends on beliefs concerning the ability of current objectives to anticipate future risks and uncertainties.     

Trade and welfare effects of a potential free trade agreement between Japan and the United States

Review of World Economics - This paper addresses the trade and welfare implications of a bilateral trade agreement between the U.S. and Japan. In 2019, the two countries signed a “stage...     

Flip a coin or vote? An experiment on the implementation and efficiency of social choice mechanisms

Experimental Economics - Corporate boards, experts panels, parliaments, cabinets, and even nations all take important decisions as a group. Selecting an efficient decision rule to aggregate...